Elizabeth Warren’s Trade Plan Empowers Workers, Not Corporations

Elizabeth Warren’s Trade Plan Empowers Workers, Not Corporations

Elizabeth Warren’s Trade Plan Empowers Workers, Not Corporations

The Massachusetts senator’s latest plan is about power as much as policies.


Fresh off the Trump Tower escalator for his campaign announcement in June 2015, Donald Trump was bashing unfair trading rules. While the speech is remembered for the racist comments about Mexicans, the bulk of his rambling tirade focused on the perils of international commerce. With his bluster about protecting American factory jobs, Trump was claiming turf long occupied by the likes of Bernie Sanders and the AFL-CIO. As president, he has consistently co-opted their framing, mixed it with racism, and begun to actually deliver on a few of the left’s old demands. With the White House adding living wage requirements for autoworkers and limiting investor rights in trade deals, Trump’s trade chief Robert Lighthizer is even gaining progressive fans who have long been shut out of Washington policy circles.

There is a real danger that Trump’s tough talk on trade could help Republicans—reborn as economic nationalists—lock down Midwestern states hit hard by the China shock: the surge of imports after China joined the World Trade Organization and US manufacturing suffered.

But Elizabeth Warren has a plan for that. She’s ditching the xenophobia and envisioning a trade regime that would make life better for workers at home and abroad. As she stated in Tuesday’s presidential primary debates, modern “trade” agreements are much more about empowering corporations than they are about cutting consumer prices. “Anyone who thinks that these trade deals are mostly about tariffs just doesn’t understand what’s going on,” she said.

This follows her Monday release of “Trade—On Our Terms,” a 3,317-word manifesto on how she would move past both Trump-style economic nationalism and the bipartisan neoliberalism that preceded him. It builds on June’s “Plan for Economic Patriotism,” the Massachusetts senator’s earlier foray into industrial policy, which proposed a new social contract between multinational corporations and the public.

For Warren, the global trade regime is not the result of some natural law. Rather, it was formed by political choices that favor certain interests over others. Manufacturing jobs in the United States were left to atrophy, while Big Pharma and Big Tech got to use trade agreements to advance anticompetitive practices that have nothing to do with trade. With different leaders, we can make better choices, she argues. Instead of using trade deals to make patent terms for pharmaceutical monopolies more lucrative, we can use government leverage to bring drug prices down. Instead of having trade tribunals that rule against state environmental policy, we could make trade deals conditional on joining the fight against climate change. Instead of companies’ benefiting from federal R&D and then offshoring production, the government can require the creation of jobs here at home for businesses that benefit from federal largesse.

Like many of Warren’s plans, “Trade—On Our Terms” is as much a theory of power as it is a set of policy ideas. It’s not a list of preferred trade deals; it’s a narrative that describes how more American workers can benefit from trade. To do this, she would marshal public power to control private power. First, she would remake the federal government’s trade advisory committee system so that worker and environmental interests have more weight than companies, reversing the current system’s tilt. She also proposes breaking up how trade agencies calculate the likely impacts of trade deals into regional estimates to allow for more thoughtful industrial planning. And instead of waiting for bureaucrats to work up the political will to enforce trade and labor law, Warren would create automatic triggers to prod them into action.

Not everyone is loving it. Economist and New York Times columnist Paul Krugman called it “the weakest Warren plan so far.” Political scientist Dan Drezner called it “the mother of all dumpster fires,” tweeting a gif of an actual dumpster fire to underscore the point. To these critics, Warren’s attacks on corporate influence on trade deals are spot on. Yet they worry about something she never said: that she would pull out of trade deals with countries that don’t meet nine readiness criteria she identified as crucial, and then jack up tariffs to the pre-deal rates.

This misreads the plan. It’s true that Warren thinks it’d be good for countries to sign up for the Paris climate deal before we sign them up for a US trade agreement. Following signature by Syria in 2017, there is not a trading partner that would be hindered by that requirement, as all countries but the United States are signatories to the accord. Some of Warren’s conditions, like ending fossil fuel subsidies and cooperating on tax avoidance, could be a tougher ask, but still seem justified given the existential threats to our democracies posed by climate change and inequality. Open trade just isn’t as important.

In any case, there’s no indication that Warren plans to follow Trump’s (in the end, empty) threats to withdraw from existing agreements. Presidents have lots of powers over trade, but unilateral rewriting of tariff schedules isn’t one of them. That’s Congress’s remit. There’s no getting rid of NAFTA tariff rates without lawmakers’ support—even if the president were to formally withdraw the United States’ signature. Rather, Warren’s plan takes repeated aim at Trump’s reckless tariffs, and pledges a revitalized technical assistance program for poor countries to lift up their labor and environmental practices—hardly an endorsement of right-wing anti-globalism as some of her critics have claimed.

For all of the merits of Warren’s plans, there is still room for improvement. On enforcement, she calls for burning down NAFTA’s two-tiered system in which investors can enforce their rights but labor unions can’t. But why not lift unions and other interests up, instead of bringing both down? Scholars have demonstrated that the quickest way to develop international legal norms is to give non-state actors access to enforcement mechanisms. Unlike governments, these actors aren’t constrained by diplomatic considerations and are motivated to pressure countries to follow global best practices. With this, the proposal misses a chance to assert bold internationalist confidence. Indeed, neither of Warren’s economic plans utter the phrase the “Green New Deal,” which would offer an opportunity for transformational change of the trade regime. And given that Warren actually has good ideas for rebuilding worker power from the bottom up, it would be refreshing to see her lean into more movement-friendly rhetoric.

Overall, Warren’s ideas are landing at a time when they are much needed. While Trump has been unable to articulate and execute a coherent vision for trade, there are Republicans waiting in the wings who are much better prepared. Senator Marco Rubio (R-FL) has assembled a team on the Senate’s Small Business Committee that voraciously devours work by progressive trade experts like Mariana Mazzucato and Ha-Joon Chang and puts out comprehensive proposals with right-wing reinterpretations of their ideas. Meanwhile, Senator Josh Hawley (R-MO) is honing his own version of “anti-cosmopolitan” governmental preferences for Middle America. We desperately need a more racially inclusive and environmentally sustainable alternative to the post-neoliberal right.

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Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

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